US Equities Stabilize, USD Drifts Lower

By IBT Staff Reporter On 08/18/09 AT 2:14 PM

The dollar was lower in the Tuesday session, relinquishing previous session's gains against the euro and sterling to slip to 1.4154 and 1.6572, respectively. The major US equity indexes stabilized following yesterday's sell-off, with the Nasdaq recovering by over 1% and the Dow Jones and S&P 500 up by around 0.8% in afternoon trading.

The euro remained confined near its lows against the dollar and yen in early morning trading, holding steady around 1.4070 and 133.30, respectively. With traders largely on the sidelines and foreign exchange direction dictated by the equity markets, the euro failed to significantly recoup its previous session's losses on the heels of a promising German sentiment survey.

Germany's August ZEW economic sentiment index climbed to its highest level in over 3-years, sharply beating consensus forecasts for an improvement to 45.0, rising to 56.1 versus 39.5 from July. The current conditions component also improved by more than expected to -77.2, versus calls for an improvement to -85.0 from -89.3

EURUSD trades above the 1.41-figure with resistance seen at 1.4130 and 1.4160. Subsequent ceilings are seen emerging at 1.42, backed by 1.4240 and 1.4275. On the downside, support starts at 1.4070, followed by 1.4040 and 1.40. Additional losses will be tempered near 1.3970, followed by 1.3940 and 1.39.